Mar. 31, 2013
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A T-Mobile connected iPhone 5. / John Moore, Getty Images

by Rob Pegoraro, Special for USA TODAY

by Rob Pegoraro, Special for USA TODAY

Question: I don't get T-Mobile's no-contract deal - how is making payments on the phone over two years any different from signing up for two years of service?

Answer. That's a reasonable question if you look through the peculiar prism that is the U.S. wireless market. For most shoppers here, buying a phone and starting service represent an indivisible transaction - so who cares if you commit to two years of paying for a phone versus paying for wireless service?

But the real potential of T-Mobile's new deal, should enough people do the math and decide it works for them, is that it might help a carrier-independent market for phones bloom in the U.S. Having phone vendors compete to cater to our interests first, not those of wireless services, would be a big deal.

In the meantime, opting for T-Mobile can save you a little or a lot of money - depending on your alternatives and how its coverage squares with your whereabouts.

What if you don't buy a new phone when that two-year term ends? At T-Mobile, your bill would shrink. With the iPhone 5 that it sells for $99.99 upfront, a $20 charge would vanish, leaving you paying $60 for unlimited calling and texting plus 2.5 GB of full-speed data - assuming current rates stay constant.

At other carriers, your only reward for concluding a contract is not having an early-termination fee hanging over your head.

(Disclosure: In early March, I bought an 8 GB Nexus 4 and signed up for a T-Mobile small-business plan.)

The Nexus 4 represents a great deal for an unlocked phone, but it's not the only option. PCMag.com analyst Sascha Segan noted that Amazon carries many recent Android phones for around $400 unlocked, including Sony's Xperia T and the HTC One S.

Sony's site sells its Android phones at a variety of prices, and Walmart offers a decent range of Windows Phone and Android devices. Consider eBay too: When the price of wireless service is independent of your choice of phone, the used-phone market is no longer the last resort of subscribers who lost a subsidized handset.

But at many of these outlets, you'll see obsolete Android specimens running pre-4.0 versions of Google's operating system, all of which you'd best avoid.

The last two times I've signed up for phone service - once when testing the iPhone 5 for a review, again when switching to T-Mobile - I saw afterwards that the bill included $8 or so a month in phone insurance I didn't remember asking for.

I've met some accident-prone people who probably need this extra protection, but in most cases it's a poor use of your money. And if you didn't opt into this strange charge you see on your bill, phone insurance is an error you need to undo immediately. Pick up the phone - what worked for me - go online, or stop in a store and have it taken off.